Vision India - Destination Next !

Kamal P. Nanavaty
President-Cracker & Polymer Sector
Reliance Industries Ltd.

Saddlebrook Resort, Tampa

Plastic news Executive Forum 2008 conference
March 9-12, 2008
1
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

2
India Snapshot

• Population 1.1 Bn (4 times US)

• Largest Parliamentary democracy
• Secular State - No state religion
• Independent Judiciary
• 18 official languages, business
language predominantly English
• Excellent Social Infrastructure –
Education, Healthcare, Travel &
Recreation.
• Third largest economy on PPP basis
(> $5 trillion)

…..land of billion opportunities

3
GDP Growth
12%

10%

India
8%

6%

World
4%

2%
USA

0%
2000

2001

2002

2003

2004

2005

2006

2007
Source: IMF

…..One of the fastest growing

4
Demographic Profile

India – % distribution of population

(1991 - 2011)

1991 2011
0-9 25.5 14.1
10-19 21.2 14.2
20-29 17.2 18.3
30-39 13.2 15.2
40-49 9.4 12.3
Dependency
50-59 6.3 9.5 70%
Ratio
60-69 4.2 6.7 60%
70-79 1.8 5.2
80+ 0.8 4.5 50%

40%

2002

2004

2006

2008

2010

2012

2014

2016
Source: Govt. census statistics

Young India is getting younger!

5
Household Expenditure (Trillion US$)
1.74 Household Income Brackets
2000 US$ (PPP)
Globals > $25000

4.1X Strivers $12500- $25000

0.85
Seekers $5000-$12500
0.42
Aspirers $2250- $5000

Deprived < $ 2250

2005 2015 2025

Source : Mckinsey Global Institute

• By 2025 India will have

– 24 Mn Rich people ~ Present population of Australia
– 400 Mn Urban Middle Class > present population of USA

Total private consumption growing >4 times

6
Share-of-Wallet
Share of wallet % Market US $ Bn

1995 2005 2025E 2005E 2025E CARG

Communication 1 2 6 9 107 13.4%

Education & Recreation 3 5 9 19 153 11.0%
Healthcare 4 7 13 29 223 10.8%
Personal Products & Services 4 8 11 32 186 9.2%
Transportation 11 16 20 70 344 8.3%
Household Products 2 3 3 12 46 6.9%
Apparel 5 6 5 23 82 6.5%
Housing & Utilties 14 12 10 50 166 6.1%
Food, Beverages & tobacco 56 42 25 179 432 4.5%
Total 422 1738 4.5%
Source : Mckinsey Global Institute

– Communication, Education & Healthcare growing @ > 10%.

– Food & Beverages accounts for ~ 25% of market

Shift from basic necessities to discretionary spending

7
 2
3
4
5
6
7
8
9
10

0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1998-99
1998-99
1999-00
1999-00
2000-01
2000-01
2001-02
White Goods

2001-02
2002-03
2002-03
2003-04
2003-04
2004-05 2004-05
CTV Sales trend (Millions)

2005-06
2005-06
Airconditioner Sales trend (Millions)

2006-07 2006-07
2.6
2.8
3.0
3.2
3.4
3.6
3.8

1
1.2
1.4
1.6
1.8
2

1998-99 1998-99

1999-00 1999-00

2000-01 2000-01

Strong growth trends in White Goods 2001-02 2001-02

2002-03 2002-03
(Millions)

2003-04 2003-04

2004-05 2004-05
Washing Machine Sales trend

2005-06
Refrigerator Sales trend (Millions)

2005-06
2006-07 2006-07
8
Automobiles
Car Sales trend (Millions)
1.6
1.2
0.8
0.4
0.0
2001-02

2002-03

2003-04

2004-05

2005-06

Two Wheelers Sales trend 2006-07 Auto Components Sales trend

10 (Millions) 20 ($ Billions)
8 15
6
10
4
2 5
0 0

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07
2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

By 2016 Auto Industry ~ US$ 145 Bn.

9
Organized Retail

Total Retailing Market

Organised Retail
% Organized

415 12.0

% Organized Retailing
Total/ Organized
Retailing Market
(US$ Billion)
258

91
3.0 50
7.8
0.5
2000 2005 2010*

Rapid growth in organized retail

10
Infrastructure investment plan $515 Billion
Source : 11th five year plan, Planning commission, NDC

Area US$ billion

Roads 79
Railways 66
Power 166
Ports 22
Airports 8
Communication 65
Water/Irrigation 100
Others 10
Total 515

~ 30% is anticipated from the private sector

Massive up-gradation over next 5 years

11
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

12
Demand Growth Drivers – Packaging

• Growth Drivers
– Food / Processed food
– FMCG items
– Packaged and fast food industry

• Applications
– Multilayer films
– BOPP Films
– Shrink & Stretch wraps
– Thin wall molding
– Thermoforming
– Blow Moulded Containers

Demand Î 6.6 Billion lbs (FY07) Î 13.2 Billion lbs (FY12)

13
Demand Growth Drivers – Infrastructure

• Growth Drivers
– Building and construction
– Public Utilities services
– Mega highway projects
– Rural Electrification Projects

• Applications
– Pipes (Gas, Water supply, Sewerage)
– Storage Tanks
– Profiles
– Geotextiles

Demand Î 2.2 Billion lbs (FY07) Î 5.5 Billion lbs (FY12)

14
Demand Growth Drivers – Agriculture
• Growth Drivers
– Advanced agricultural technology
– Government spending
– Retailers – farmers joint
initiatives
– Distribution Channel /
Refrigerated Storage

• Applications
– Greenhouse Films
– Low tunnels
– Micro irrigation: Drip / Sprinkler
– Mulch Films
– Crates, Pallets
– Bulk Packaging

Demand Î 0.45 Billion lbs (FY07) Î 2.2 Billion lbs (FY12)

15
Other Growth Areas

• Rigid Packaging
– Edible Oil / Lube Oil

– Pesticides / Chemicals

– Caps & Closures

• Automotive

• Appliances

• Medical Hygiene & Personal Care

• Industrial Applications

Demand Î 1.1 Billion lbs (FY07) Î 4 Billion lbs (FY12)

16
India – Growth in Polymers

13.7
• Growth triggers

Billion lbs
– Strong Economy
– High GDP growth
– Favorable Demography

6.6
– Growing Middle Class

5.5
– Rising Disposable Income

4.0
2.2
1.9

1.8
1.5

1.1
• Policy thrust

0.5

0.4
0.2
– Export through SEZ

Others
Agriculture

Health Care
Infrastructure
Packaging

Consumer
– Agriculture

Goods
– Infrastructure

• Retail Revolution
2006-07 2011-12

Polymer demand 27.5 Billion lbs by 2012

17
Converting Industry : Present Scenario
• Installed Capacity Î 26 billion lbs
• 5 Yr. Capacity Growth Î 8%
• Revenue Î18 billion US$
• Top 300 companies account for 55% volume

Availability of ….
• Multilayer blown film line up to 7 layers
• BOPP Unit, installed capacity 265 Mn Lbs
• Slit film extrusion line with output 2100 Lbs/hr.
• World’s largest integrated Clean Room FIBC manufacturing facility
• World’s largest CD / DVD manufacturing facility
• World headquarter for largest Lamitube manufacturer

18
Opportunity : Injection Molding
• Opportunities in:
– High Capacity IM M/cs
– Multi material processing M/c
– PP Preform Manufacturing (ISBM)
– M/cs for Advanced Materials
(Composites & Long Glass PP)
• Investment in:
– Automotive Component
– Houseware & Appliance
– Thin wall Injection Moulding (twim)
– PP Preforms (Beverage & Dairy)
– DVD Covers

19
Opportunity : Multilayer Blown Film

• Opportunities in:

– High Capacity M/cs

– Automatic thickness control

– Seven layer & higher combination

• Investment in:

– Multilayer Lines

– Lamination Lines

20
Opportunity - Sheet Extrusion

• Opportunities in:
– High Output M/cs
– Low of Automation leading to Low
Productivity & Higher Wastages
– Energy Efficiency Processes
– High Quality Mould hence products

• Investments in:
– Mono / Multi layer Sheet Extrusion
– High Speed Automated Thermoforming
line for Retail & Dairy
– Thermoformed parts for Growing
Automotive Industry

21
Investments Opportunity Processing : $9.2 Billion
$ Billion
Monolayer, Multilayer,BOPP, Cast PP, PVC
Packaging 5.1
Film, Raffia, Calendar, Blow Molding
Injection Molding Consumer
2.0
Goods

Pipe, Profiles, Wire and Cable, Blow-

Infrastructure 1.0
molding, Calendaring
Injection Molding, Filament ,
Others 0.7
Compounding
Pipes, Injection Molding, Film
Agriculture 0.3

Multilayer, Monolayer, Non Woven,

Health Care 0.1
Injection Molding, Film

Destination Next !
22
Additional Capacity required ….
For 2006 – 2011 (Mn Lbs)

Injection Moulding 6600

PVC Pipe 3960
Multilayer Film 1320
Blow Moulding 1320
HDPE Pipe 880
Rotomolding 440
Fibre & Filament 440
BOPP 440
PVC Profile 220
Cast PP 220

…… 26 Billion Lbs !
23
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

24
India Advantage : Machinery Cost
(‘000 US$)
Savings

910 53%
HDPE Pipe Plant
1950

Blow Moulding
200 33%
300

Injection Moulding
200 43%
350

203 43%
Bag Making Machines
354

Indian Made
481 27%
Multilayer Film Plant
660 Imported

(Machines of comparable specification)

• JVs between Battenfield – Kabra Ext., Brampton & Mamata M/c., Demag –L & T
• Ferromatik also present in India

Between 30% ~ 50% saving in Capital cost

25
India Advantage : Manpower
Cost of skilled worker
(Graduates/ post graduates)*
Large low cost
Pool of 100
skilled talent

10

USA India
* Indexed to 100

• Trained manpower 6 times larger than US

• Cost 10 times lower

Source : McKinsey analysis

26
Converting Industry – Revenue & Profitability

18
16
16
14 12.6
12
%
10
8.3
8 7.6

6
4
Sales Growth-5Yr EBITDA Margin

USA India
Source :
US: Onesource Dec 2007 ,Industry median, 35 companies,
India : Prowess Mar 2007 :24 companies

High growth and higher margins

27
Market Valuation Gain (5 Yrs)

10 945%

9
8

7
6
443%
5

4
3
192%
2
57%
1

0
Dow Jones Shanghai CP BSE Sensex Indian Processors

Substantially higher gain in Valuation

28
Plastic Processing ÎWin -Win

Large Growing Market

Abundant skilled labor
Low wages Large Size
Low Capital Investment Technology
Improving infrastructure Productivity
Fragmented capacities Sustainable Quality
Stable Democracy competitive
InnovationÎChoices
Easy availability Raw material advantage
Branding
Good quality life Î Supply Chain
• Education, Medical, Living
Business Practices
conditions, Domestic help,
entertainment, shopping etc

US Companies growing at +40% rate in India

29
American processing companies in India

• Visteon India Î 1999

– 2 IM machine Î Workforce < 100 employee
– One OEM ÎFord
• Visteon has grown tremendously Î12 plants
– New plants & JV's across India to service auto systems to MUL,
Hyundai, M&M, GM & TATA Î 10 OEMs and Export 6 Countries
– The total workforce of Visteon group (including JV's) Î 2800 nos
• Visteon India's revenue growth
– 2006 Î Rs 400 crÎ $ 100 Million
– 2007 Î Rs 900 Cr Î $ 225 Million

Growth..!
30
American processing companies in India

• Samsonite India Î 1997

– Luggage industry Î Rs 3,000-crore ($ 750 Million)
– Mid-and upper-end of the market
• Samsonite as a brand growing @ 15-18 per cent.
• American Tourister is growing @ 75 per cent.
– Luxury brand Î launch of its super premium Black Label
• Samsonite India
– Revenue Î Rs 650-crore ($160 Million) ~ 15% global sales
– Indian footprint Î 200 stores

Growth..!
31
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

32
Business Segments

1970s 1980s 1980s 1990s 2000s 2000s

Textiles Polyester Plastics Refining & Oil & Gas Infrastructure
Marketing & Services

• Suitings • PSF • LLDPE • LPG • Crude Oil • Retailing

• Shirtings • PFY • PP • Gasoline • Natural Gas • SEZ
• Dress Mtls • POY • PVC • Naphtha •E&P • Life Sciences
• Sarees • P. Chips • MEG • ATF
• Upholstery • PTA • Ethylene • Kerosene
• PX • Propylene • Diesel
• LAB • VCM • Petcoke
• EO • Sulphur
• Pipes • Petro-Retailing

Vertical integration, International competitiveness,

Sectors with strong growth potential
33
Largest Indian Private Company
• Revenues : US$ 27.2 billion • Revenues equivalent to 2.9% of

• Exports : US$ 15.3 billion India’s GDP

• Net Profit : US$ 2.75 billion • 12% of India’s total exports

• 61% of revenue from Refining and • 6.5% of Government of India’s

37% from Petrochemicals, 2% from indirect tax revenue

others • 13.4% weighting in BSE Sensex

• 5.9% of India’s total market cap

• Highest market capitalization for

any private sector company

Reliance mirroring India’s Growth

34
Phenomenal Growth

60000 Market Cap (LHS) Net assets (LHS) Net Profits (RHS) 3000

In US$ million Demerger

50000 RPL Refinery 2500
Fortune 500
Trevira Acquired
40000 2000
KGD6 Discovery
IPCL Acquired

30000 Refinery 1500

Commissioned

20000 Cracker 1000

Commissioned

Polymers
Polyester Manufacturing
10000 Manufacturing 500
IPO

0 0
77
78
79
80
81
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86
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00
01
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03
04
05
06
07
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
Phenomenal Growth
35
Global Rankings

Criterion 2006 2007

Net profit 194 179
Net worth 226 190
Net Sales 342 269
Assets 351 299

1 4 5 7 7 3

One of the Fastest Climbers

36
Reliance : Manufacturing Sites

• Hoshiarpur

Jamnagar
• Allahbad
• Barabanki
Gandhar • Ahmedabad
Vadodara • Bhopal
Hazira
• Silvassa
• Den Kanal
Mumbai
• Pune
Patalganga Overseas :
Nagothane
Oil Exploration Blocks :
• Yemen, Oman, Columbia,East Timor
& Australia
Polyester Manufacturing Site:
• Trevira (Germany,Denmark, Belgium)
• Hualon Corp. (Malaysia)
• Polyester sites
Petrochemical sites
Refining & Petrochemical sites
37
We believe in India Growth story
38
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

39
 “Rising aspiration of 85% of world
mass is causing the shift to a more
balanced world…..
Enormous opportunity in growing
prosperity of 5 Billion new consumers”
Mukesh Ambani
(Chairman & MD,
Reliance Industries Ltd.)

40
 “You do not require an
invitation to make profits”

Dhirubhai Ambani
(Founder Chairman– Reliance Group)

41
Welcome to India..!
Contents

India Overview
Growth Opportunities
Advantage India
Reliance Industries Ltd.
Concluding Remarks
Delegate Profile

43
Alpha Packaging Ltd

• Alpha Packaging Ltd manufactures

products like
– PE Bags & Liners
– PET Bottles & Preforms
– POF Shrink Film
– Stretch Film
– IV Fluids

• Largest Indian producer of IPP Film. Mr. Kamalkishor Agarwal

(Managing Director)

44
Cello International Pvt. Ltd.

• Cello manufactures
– Household plastic products
– Moulded plastic furniture
– Oral Hygiene – Toothbrush
– Writing Instruments
– Moulds, Plastic packaging
– Health & Beauty care products
– Paper products
Mr.Satyajit Chatterjee
(Director International Sales & Mktg)

45
Essel Propack Limited
• Essel Propack Limited is in the
business of manufacturing
– Laminates
– Laminated tubes
– Specialty packaging materials
– Medical devices
– It is the world’s largest
manufacturer of the laminated
tubes.
• Essel Propack Limited is part of
Essel Group with interests in Mr.R.Chandrashekhar
(President – Medical Devices &
– Media programming Speciality Packaging)
– Broadcasting & distribution
– Packaging
– Entertainment
– Telecom & trading

46
Flexituff International Ltd
• Flexituff is engaged in
manufacturing a wide range of
– Flexible Intermediate Bulk Container
(FIBC) bags
– It is the second largest unit of its
kind in the world.
– It processes over 42 m lbs of
polymers per year.

• It has the world’s largest integrated

clean-room manufacturing facility. Mr.Saurabh Kalani
(Owner)

47
Hitech Plast Limited
Hitech Plast Limited

• Hitech Plast Limited is engaged

in the manufacture and sale of
innovative containers to
industries like
– Paint
– Personal care
– Agro chemicals
– Health care
– Confectionary
– Lube
– Retail household products. Mr.Ashok Goyal
(Managing Director)

48
Jain (Americas) Inc
• Jain Irrigation Systems Ltd.
manufactures complete range of
precision-irrigation products
(both drip and sprinkler)
• The other divisions in the
Company include
– PVC and PE pipes
– PVC and PC Sheets
– Vegetable Dehydration
– Fruit Processing
– Fresh Fruits
– Tissue Culture Mr.Murali Ramanathan
– Bio-Tech Laboratories (Sr. Executive VP - US Operations)
– Greenhouses
– Solar Water Heating and
Lighting Systems Division

49
Lohia Starlinger Limited
• LOHIA STARLINGER LIMITED is
one of the world's largest
producers of machinery for
PP/HDPE woven sacks and
fabrics

• Around 65% market share in

India

• It has supplied more than

18000 circular weaving
machines all over the world, Mr. Gaurav Lohia
which produce about 14000 (Director)
million bags every year.

50
Mamata Machinery
• Vega Bag Makers and Pouch
Makers.
• Plastics processing machinery with
installed Capacity of 200-250
Machines per year.
• With more than 2000 Machines in
over 64 countries worldwide and
increasing every day, Mamata
machinery is India's Largest
manufacturer and exporter of
SERVO DRIVEN Plastic Bag making Mr. Dharmisth Patel
(President – US Operations)
and Pouch Making Machines.
• Group consists of 9 Indian and 2
overseas companies.

51
Narendra Plastic Pvt. Ltd.

• Manufactures shopping bags,

polyethylene & polypropylene bags.

• Annual installed capacity of 44 Mn

lbs in 3 plants

Mr. Neemit Punamiya

(Managing Director)

52
Nilkamal Ltd.

• Molded furniture & materials

handling products

• Asia’s largest molded furniture

company

• Processing nearly 132 Mn lbs per

annum
Mr.Vinod Krishnan Warrier
(Vice President - Sales & Marketing)
• Manufactures more than 10 million
chairs per annum

53
National Plastic Industries Ltd.

• Houseware, furniture, crates,

construction & other plastic
injection molded products.

Mr.Paresh Vinodrai Parekh

(Managing Director)

54
Plastiblends India Ltd.
Kabra Extrusiontechnik Ltd.

• India’s largest manufacturer and

exporter of Masterbatches, Additives
and Compounds

• Manufacturer of Plastics extrusion

machinery

Mr. Anand S Kabra

(Director )

55
Prince Plastics International Pvt Ltd

• Prince Plastics manufactures house

ware, furniture and thermo ware
product like buckets, basins, food
containers, furniture items,
casseroles, insulated jugs, chillers
etc.

• It is the largest manufacturer and

exporter of house ware & insulated Mr. Baavesh Chheda
products from India. (Director )

56
Sintex Industries Limited

• Activities include
– Rotomolding
– Profile extrusion: windows, doors
– Composites
– Twin-sheet thermoforming
– Sandwich panels
– Prefabs
– Automotive plastics & custom parts

• World's largest manufacturer of Mr.S.B. Dangayach

(Managing Director )
plastic tanks

57
Tipco Industries Limited

• Manufacturer of
– Engineering thermoplastic compounds
– Thermoset resins and compounds
– Elastomers
– Masterbatches
– Material handling pallets.

• Installed Capacity of 55 Mn lbs/Annum

Mr.Nirmal B Thakkar
(Chairman )

58
Tufropes/ Jaicorp

• Synthetic cordages which include

twines, ropes, fishing nets and sports
nets
• FIBC
• Leno
• Geotextiles

Mr.Arun Goel
(Director)

59
Vishakha Polyfab Pvt. Ltd.

• 7-layer barrier & multilayer flexible

packaging films

• Materials handling products, including

big bins, pallets, etc.

• India’s largest manufacturer of 7 Layer

Barrier Film

Mr.Jigish N Doshi
(Chairman & Managing Director)

60
Thank You

61